Tuesday, August 31, 2010
This Op-Ed piece was printed initially in the Omaha World Herald, 2009
I say it is time to collect internet sales taxes.
This call to arms may be anathema to a fiscal conservative but let’s inject some facts into the discussion.
State and local government budgets are, in some part, based upon the collection of sales tax revenues. Basic epistemology of fiscally conservative thought is that fewer taxes equate to smaller government and that is usually perceived as a good thing. However maintaining functional government budgets is inarguable.
As we look at the evolution of technology and its impact on the retail industry, we are seeing a growing shift to online sales of everyday goods. For the most part this shift towards online sales does not capture sales taxes – negatively impacting State and local government budgets. The shift is also creating an unlevel playing field that favors online retailers against local ‘brick’ retailers since a tax free purchase may equate to as much as a 12% discount in some markets [ 7% here in Omaha].
Put another way, the immediate effect of a discount on tax-free online purchases sends wealth out of the Omaha market and, as a community; we lose the benefit of the economic multiplier effect created by that money circulating throughout our state and community. In the long term we may also risk losing retail jobs and, as we all know, the retail industry is a significant employer.
It is a fact that small business is the engine that drives the American economy. The Maryland based Tischler & Associates, Inc. (now d/b/a Tischler Bise) reported that “Big Box retailers generate a net annual deficit of $468 per 1,000 square feet (to taxpayers)…Fast food restaurants have a net annual cost of $5,168 per 1,000 sq. ft…In contrast, specialty retail has a positive impact on public revenue of $326 per 1,000 sq. ft.” (Tischler & Associates) When you weigh in the actual employment impact as well as the economic multiplier effect, government should be strongly incentivized to support the local retail economy.
According to the Wall Street Journal, several states, including North Carolina, Hawaii, California, Connecticut, New York, Maryland, Minnesota and Tennessee, have decided to level the playing field through recent legislation. Online behemoth Amazon has threatened to “clip local affiliates” rather than pay their currently defined legal share of sales taxes. (Fowler, 2009). The University of Tennessee estimates that “uncollected Internet Sales taxes will cost state and local governments more than $11,000,000,000 a year by 2012.”
In its early guise, government nurtured the viability of online companies by allowing this issue to go unnoticed. According to the U.S. Census Bureau, in the First Quarter of 2009 online sales were $31,717,000,000. (Quarterly Retail E-Commerce Sales, 1st Quarter 2009, 2009) By any standards the online retail industry has been sufficiently incubated and it is time to level the playing field as well as increase State and local revenues through the appropriate application of existing and needed sales tax collection laws.
Studies indicate that 8% - 12% of retail sales have moved online; the impact on government budgets is apparent. Because of the disparity of various state and local taxation levels, the process of collecting and submitting levies of online sales would be a significant burden to retailers. A suggested method could be to have a uniform nationwide taxation level for online sales thus simplifying the collection and submission process for retailers. Another “level playing field” consideration could be to reduce in-store sales tax levels as a result of collecting sales taxes on all retail sales once again.
Finally, this is not an advocation for a new tax. Nor can a reasonable person misconstrue this to be a call to increase taxes. If we are going to tax retail sales, and history shows we are, isn’t it about time that Nebraska, and Omaha, join in the processes to balance the playing field? At the very least this is an existing loophole that needs to be debated.
Richard ‘Rick’ Galusha
Fowler, G. A. (2009, June 19). Amazon Threatens Cuts Over State Taxes. Wall Street Journal , p. B3.
Quarterly Retail E-Commerce Sales, 1st Quarter 2009. (2009, May 15). Retrieved June 24 , 2009, from U.S. Census Bureau News: http://www.census.gov/mrts/www/data/html/09Q1.html
Tischler & Associates. (n.d.). Retrieved September 18 , 2003, from http://www.smartgrowth.org/news/bystate.asp?state-ID
Published Sunday August 29, 2010
Omaha World Herald newspaper
Midlands Voices: Act urgently on Whiteclay
By Rick Galusha
The writer is an assistant professor in the College of Arts and Sciences at Bellevue University. He is assistant director for the university’s Center for American Visions and Values.
Nebraskans are shocked to learn that a portion of the second-poorest area in the entire Western Hemisphere lies within our state, in the area that includes the Pine Ridge Reservation. Consider the following figures from the 2002-03 edition of Regional Differences in Indian Health, published by the U.S. Department of Health and Human Services:
>> The age-adjusted alcoholism death rates in the Reservation area are nearly 17 times higher than the national population mean (108.7 per 100,000 people versus 6.7 nationally).
>> The age-adjusted tuberculosis death rates in the Reservation area are eight times higher than the national population mean (2.4 per 100,000 versus 0.3 nationally).
>> The age-adjusted diabetes mellitus death rates in the Reservation area are more than five times higher than the national population mean (68.7 per 100,000 versus 13.3 nationally).
>> The age-adjusted suicide rates in the Reservation area are nearly three times higher than the national population mean (29.7 per 100,000 versus 11.2 nationally).
Because a majority of the Pine Ridge Reservation lands are located within the borders of South Dakota, some suggest that this is a state sovereignty issue. However, the effects spill into our state, including the numerous medical and legal concerns that define Whiteclay, Neb., (population 14).
Whiteclay’s four package stores sell the equivalent of more than 3 million cans of beer annually. Adult alcoholism rates on Pine Ridge have been estimated to exceed 65 percent.
In an era when bitterness can define the political landscape, our Legislature passed a modest bill this year. In July, the Douglas County Republican Party passed a resolution calling for the establishment of a committee to seek viable solutions for the extreme poverty on the Pine Ridge Reservation. Independently, later that month, the Nebraska Democratic Party passed an identical resolution. This solution-seeking-committee would consist of the governors of Nebraska and South Dakota as well as the president of the Lakota Sioux Nation.
While the choice of sobriety is an individual decision, there are several things Nebraskans can do to provide hope:
>> Demand enforcement of existing Nebraska laws in Whiteclay, Neb.
>> Empower our elected officials to begin seeking long-term solutions to this extreme poverty, including calling upon the government of South Dakota to participate.
>> Create awareness by sharing this commentary with family members, friends, co-workers and congregants.
>> Take specific action by sending letters and e-mails and placing telephone calls to elected officials.
>> Use social networking to enhance awareness.
>> Contact the Whiteclay awareness committee (WhiteclayAwareness@gmail.com) to schedule a speaker and-or show the film “The Battle for Whiteclay.” (Include schools, civic or business organizations, churches, synagogues, mosques or living rooms.)
This nonpartisan issue is gaining momentum. Readers of the New Testament will recognize the passage, “I tell you the truth, whatever you did not do for the least of these, you did not do for me.” It would be a moral failure for Nebraskans to allow this misery to continue.
To quote Edmund Burke, “If not us, then who? If not now, then when?”